The Ministry of Finance and the Central Bank of UAE recently announced the successful outcome of an auction for Islamic Treasury Sukuk “T-Sukuk” denominated in dirhams. The auction was part of the Islamic Treasury Sukuk issuance program for the third quarter of 2024, and the results were made public on the Ministry’s website.
During the auction, there was significant interest from eight primary distributor banks for both the 3-year and 5-year tranches. A total of AED 6.76 billion in bids was received, which surpassed the subscription volume by a staggering six times. This level of demand is a clear indication of the strong market response to this program.
The success of this auction can be attributed to its competitive pricing, which was achieved through market-driven forces. The yield to maturity (YTM) for the 3-year tranche came in at 4.77%, while that for the 5-year tranche was 4.43%. These rates were slightly lower than comparable U.S Treasury securities at the time of issuance, but they still represented excellent value for money for investors looking to invest in local currency Islamic bonds.
The issuance of these bonds helps establish a yield curve in UAE dirhams, offering secure investment opportunities for investors. This has contributed significantly to enhancing the competitiveness of our local debt capital market and improving our investment climate, which is crucial for supporting sustainable economic growth.
Overall, these auction results underscore how popular and successful this program has been with investors, demonstrating their confidence in our country’s ability to manage debt effectively while maintaining stable economic growth over time.
In conclusion, it is clear that there is strong demand and positive market response to this Islamic Treasury Sukuk Program issued by our government through collaboration with Central Bank UAE. This issuance has provided investors with secure investment opportunities while also contributing significantly towards enhancing our local debt capital market’s competitiveness and supporting sustainable economic growth.
